27 Feb 2015
PBoC to refrain from widening the USD/CNY band – BBH
FXStreet (Barcelona) - According to the Research Team at Brown Brothers Harriman, the chances of PBoC widening the band are slim as doing so at the current juncture would sent a wrong signal to the markets.
Key Quotes
“The PBOC fixed the USD/CNY rate sharply higher today, the largest daily move in over a month. The fix was at CNY6.1475, the highest level since last November, while spot moved to CNY6.2694, the highest in over two years.”
“The spread between the two has been at the 2% limit for most of February, leading to some speculation that the PBOC may widen the band again. We are not so convinced.”
“Although this is likely to happen at some point, doing so while the market is right at the top end of the corridor would send the wrong signal.”
“We note that the fix is just above the middle of range for the last 12 months (roughly 6.11-6.17), and is also right at the average fix over this time period of 6.1460.”
“For now, we remain skeptical that the weakness in the yuan will be a sustained trend.”
Key Quotes
“The PBOC fixed the USD/CNY rate sharply higher today, the largest daily move in over a month. The fix was at CNY6.1475, the highest level since last November, while spot moved to CNY6.2694, the highest in over two years.”
“The spread between the two has been at the 2% limit for most of February, leading to some speculation that the PBOC may widen the band again. We are not so convinced.”
“Although this is likely to happen at some point, doing so while the market is right at the top end of the corridor would send the wrong signal.”
“We note that the fix is just above the middle of range for the last 12 months (roughly 6.11-6.17), and is also right at the average fix over this time period of 6.1460.”
“For now, we remain skeptical that the weakness in the yuan will be a sustained trend.”